The Finnish Property Market 2023 report has been published.
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Property investment activity decreased in the latter half of 2022 in the Finnish property market due to the increased economic uncertainty. The transaction volume of the first half of 2022 amounted to almost €4.5 billion, which was the highest H1 volume ever. In Q3 and Q4, transaction volumes reached €1.5 billion and €1.2 billion, respectively. The total transaction volume of 2022 amounted to €7.2 billion, and the volume increased by 2% from the previous year. The largest transaction of the year was the acquisition of the Stockmann department store property in the Helsinki CBD by Keva for €400 million in the first quarter of the year.
Residential properties were the most traded property sector for the second consecutive year, accounting for 29% of the total volume (€2.1 billion) in 2022. Public use properties accounted for 21% of the total volume, and they reached a new record annual volume of more than €1.5 billion. Sector’s transaction volume was boosted by several transactions, where municipalities sold their service properties to property investors. Transaction activity of hospital and other healthcare properties in particular was high in 2022.
Despite of a few large office property transactions in Helsinki, the office property transaction volume decreased to €1.2 billion, which was the lowest annual volume since 2014. Also the volumes of retail and industrial property transactions amounted to approximately €1.2 billion. All these three commercial property sectors accounted for some 16% of the total volume in 2022.
Foreign investors’ activity decreased towards the end of 2022, but, however, their share of the total volume in the latter half of the year increased markedly compared to the beginning of the year. In total, foreign investors accounted for 48% of the total volume in 2022 (€3.5 billion), while their share was more than 50% in both 2020 and 2021. Some 45% of foreign investors’ investments were originated from other Nordic countries. Five new foreign property investors entered the Finnish market during the year. The most significant newcomer was the Dutch Orange Capital Partners, which acquired over 4,000 rental apartments in two large portfolio transactions, together with Singaporean GIC. Of the domestic property investor groups, property funds were, again, the most active buyers, accounting for 31% of the total volume.
More detailed information and analysis on property transactions in Finland can be found in the KTI Transactions information service. For more information, contact: Mikko Soutamo (mikko.soutamo(a)kti.fi, +358 50 548 0480) or Olli-Pekka Virkola (olli-pekka.virkola(a)kti.fi, +358 50 330 5287).
The changing economic and investment market environment challenges the real estate market. Transaction market has been active so far, but a clear decrease in volumes is expected in all property sectors. The deteriorating economic situation and the cost pressures of companies are reflected in the office and retail rental markets, where vacancy rates are expected to increase. In the residential market, however, the uncertainty is expected to strengthen rental demand.
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However, the war does not seem to have any immediate severe effects on the Finnish property market: the transaction volume for the first four months of the year clearly exceeds that of the previous year, and investor interest extends widely to various property sectors. However, the effects of the war will extend to the Finnish property market, at least indirectly, through increased uncertainty and a deteriorating economic outlook. Over time, the changing economic and investment market environment will be reflected in both real estate investment demand and the space needs in different property sectors.
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KTI Market Review Spring 2022
The Finnish Property Market 2022 report has been published.
View the flyer here.
Download The Finnish Property Market full report from here (free of charge).
Orders for printed reports and other matters, please contact us at kti@kti.fi or tel. +358 20 7430 130.
Total return on Finnish property investments increased to 9.2% in 2021
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According to the statistics of KTI, the transaction volume in the Finnish property market amounted to €7.0 bn in 2021. The volume increased by 24% from the previous year, and by 10% compared to 2019. Transaction activity was especially high in the latter half of the year, when Q3 and Q4 transaction volumes reached €2.1 billion and €2.2 billion, respectively. Also the number of transactions increased markedly: in 2021, approximately 340 property transactions exceeding one million euro were carried out, compared to 260 transactions in 2020.
The largest transaction of the year was the acquisition of Kielo’s office property portfolio by Castellum for €640 million. The portfolio comprised 22 office properties in the Helsinki metropolitan area, Tampere, Turku, Jyväskylä and Lahti. The second largest transaction of 2021 was completed by CapMan’s new residential property fund, who bought 1,854 rental apartments from ICECAPITAL. The transaction price amounted to over €500 million.
Residential properties and portfolios were the most traded property sector in 2021, accounting for 33% of the total volume (€2.3 billion), followed by office properties (29%), industrial properties (15%) and public use properties (13%). Retail property sector has suffered the most from the pandemic, and the volume of retail property transactions decreased to some €700 million in 2021, corresponding to approximately 10% of the total volume.
International investor interest in the Finnish property market has remained strong. In 2021, foreign investors completed large transactions in all main property sectors and accounted for 54% of the total volume. In total, foreign investors acquired properties worth €3.8 bn, while their sales totalled €1.8 bn in 2021. About half a dozen new foreign property investors entered the Finnish market during the year. Over 60% of foreign investors’ investments were originated from other Nordic countries, mainly by operators who have their own local organisations in Finland. Of the domestic property investor groups, property funds were the most active buyers, accounting for 29% of the total volume.
More detailed information and analysis on property transactions in Finland can be found in the KTI Transactions information service. For more information, contact: Mikko Soutamo (mikko.soutamo(a)kti.fi, +358 50 548 0480) or Olli-Pekka Virkola (olli-pekka.virkola(a)kti.fi, +358 50 330 5287).
The rapid recovery of the economy and the gradual return of everyday life towards that of normal times are reflected in the Finnish property markets. The transaction market remains active, construction volumes are growing, residential rental demand is picking up and gradual recovery is also expected in the commercial property rental markets. Transaction volume of the first three quarters amounted to €4.7 billion, which is about half a billion higher than in the corresponding period in 2020. Residential and offices are the most traded property sectors.
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KTI Market Review | Autumn 2021
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The Finnish Property Market 2021 report has been published.
View the flyer here.
Download The Finnish Property Market full report from here (free of charge).
Orders for printed reports and other matters, please contact us at kti@kti.fi or tel. +358 20 7430 130.
